Harcourt Near Sale of Sea World

By THOMAS C. HAYES, Special to The New York Times

Published: August 14, 1989

DALLAS, Aug. 13—
Harcourt Brace Jovanovich Inc. has narrowed the list of potential buyers for its four Sea World parks and the other properties in its entertainment unit and plans to sign an agreement soon, people close to the company say.

Wall Street analysts said the most likely buyers would be several of the nation's large theme park operators, including the Walt Disney Company, MCA Inc., the Anheuser-Busch Companies, or a group of unidentified Japanese bidders J. Kendrick Noble, an analyst at Paine Webber Inc., estimated the parks would sell for about $1.3 billion. No Comment on Talks

Spokesmen for Disney and Anheuser-Busch declined to comment. A spokesman for MCA did not respond to a request for an interview. And Margaret Mary McQuillan, senior vice president and secretary of Harcourt Brace, declined to comment on the talks or to identify any bidders.

Harcourt Brace, the nation's largest publisher of educational, scientific and medical textbooks, said on June 20 that it would sell the theme parks in order to reduce the huge debt it assumed in 1987 to thwart a hostile takeover attempt by Robert Maxwell, the British publisher.

The company currently has $2.6 billion in long-term debt, which works out to an extraordinarily high debt ratio of 84 percent of total capital.

On Friday the company reported a $61 million loss for the second quarter, compared with a loss of $62.7 million in the period a year earlier. Sales rose 5 percent, to $434.4 million. $91.6 Million in Interest Costs Steep interest costs of $91.6 million, compared with $78.7 million a year earlier, overshadowed a 20 percent gain in pretax profits. Insurance, parks and publishing operations combined earned $46.7 million in the quarter, compared with $38.9 million a year earlier.

The operating results included a 49 percent gain in profits from the theme parks, to $18 million, although revenues slipped 15 percent, to $105.7 million. Analysts said Harcourt Brace had sharply reduced advertising budgets a year ago, which might have hurt attendance this summer.

The company said attendance at its Sea World in Orlando, Fla., had declined because of competition from the new Disney-MGM Studio tour, which opened in May.

Concession workers and other employees at Sea World in San Antonio say crowds there have been smaller than expected this summer. The San Antonio park attracted 3.3 million visitors when it opened in 1988, or 10 percent more than projected.

Analysts said the report of sluggish attendance should not affect talks to sell the operations. Harcourt Brace would not disclose attendance figures. Second-Largest Operation

Collectively, the four Sea World parks, in San Diego, Cleveland, Orlando and San Antonio, along with Cypress Gardens and the recently opened Boardwalk and Baseball park in central Florida, represent the nation's second-largest theme park operation, after Disney.

Sales and pretax profits in the unit roughly doubled in the last three years. It earned $61.9 million last year on revenues of $388 million.

Disney, MCA and Anheuser-Busch each have the financial muscle to pay $1.5 billion or more for the parks. Analysts and industry executives say the three companies also have good reasons for making serious offers.

Of the three, Disney appears to have the least interest, they said. Its hands already are full with continuing park expansion in Florida, a Euro-Disneyland under construction near Paris and a sea-oriented park being studied for a site near Long Beach, Calif.

''In many ways, Disney has the least need to do this, although that doesn't mean they wouldn't be interested,'' said Harold Vogel, an analyst with Merrill Lynch & Company. Anheuser-Busch's Parks

Anheuser-Busch, the nation's leading brewer, opened its first Busch Gardens park near Tampa, Fla., 30 years ago and now operates four parks. The parks produced an estimated $200 million in revenue last year, said Marc I. Cohen, an analyst at Sanford C. Bernstein in New York. That was a fraction of Anheuser's total sales of $9.7 billion.

Yet the company clearly wants more growth in its entertainment unit. In June, the Spanish Government gave Anheuser-Busch approval to build a $300 million theme park and resort complex along the Mediterranean coast south of Barcelona.

Over all, Anheuser-Busch's parks recorded six million visitors last year, an 8 percent increase. The parks are the original wildlife park in Tampa; a water park, also in Tampa; a second Busch Gardens, opened in 1975 in Williamsburg, Va., and Sesame Place, a play park for children 30 miles north of Philadelphia, near Langhorne, Pa. Opportunity for MCA

Sea World could help MCA to lessen the risk it will face when its new Universal Studios tour opens next spring in direct competition with the Disney MGM tour.

Sea World's Orlando park ranks second in attendance to Disney attractions in the area. Industry executives said MCA might be able to bolster attendance at its new Universal tour if it could sell two-day passes that included Sea World.